Rogers: US T-Bonds Next Great Short

July 07, 2011

Jim Rogers, the natural-resources-investing guru, is more bullish than ever on commodities. The thesis he laid out in his 2004 book “Hot Commodities” has even longer legs, partly because investments in new capacity were put off after the market collapse of 2008-2009.

Rogers told Managing Editor Olivier Ludwig that he continues to be exceedingly bearish on the U.S., predicting that shorting long-dated U.S. Treasury debt will be one of the great secular plays of the coming years.


Ludwig: People are talking about you being long the dollar. Why?

Rogers: Mainly because everybody is so bearish on it—including me—I decided to go long the dollar. What I’ve found over the years of investing is that when everybody is on one side of the boat, you should go to the other side, at least for a while. So, I’ve gone to other side of the boat—I own the U.S. dollar, and we will see. I’m a very bad market-timer; I’m a horrible trader, so I’m sure I’m wrong. I shouldn’t even be trying it, but there I am.

Ludwig: Apart from being long the dollar, can you refresh me as to why one ought to be bearish the dollar, longer term?

Rogers: Well longer term, the U.S. dollar is a disaster. The U.S. is not just the largest debtor nation, it is also the largest debtor nation in the history of the world. And, throughout history, when this sort of thing has happened, no country has resolved this sort of challenge itself without a crisis or a semi-crisis. Politicians are certainly not going to solve the problem. No politician who understood the problem could even discuss it with the American public. So, until the crisis comes—or the semi-crisis—and something may get better for a while, we have serious problems facing the U.S. dollar and the U.S.

Ludwig: Can you give me an update on how you view the commodities spike you foresaw more than a decade ago and wrote about in your book “Hot Commodities,” particularly in view of the recent pullback?

Rogers: Well, all markets, bull or bear, have contractions, consolidations, corrections—call them what you will—and it looks as though that’s happened to some commodities now. It’s also happened to some stocks and some currencies. It’s the way the world works. If you look at oil, for instance, it has gone down over 50 percent three or four different times since 1998. That’s what markets do, and they will continue to do that. I would expect we’re going to see many more periods like this in the next decade. I hope we do. Anything that goes straight up you know turns around and comes straight down eventually.

Ludwig: So, what you’re telling me is that the commodities boom that you foresaw 12 years ago is basically intact?

Rogers: Yes. I do not see any major new sources of supply. We know that the known reserves of oil continue to decline worldwide. We know that there are huge shortages of agriculture developing. I don’t know if you knew this, but the average age of farmers in America is 58 years old. In 10 years, they’re going to be 68, if they’re still alive. Throughout the world, we have serious, maybe even catastrophic developments in agriculture, which is going to hurt us all over the next couple of decades. There will be setbacks and corrections along the way, but we have serious problems facing us in nearly all commodity areas.


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